Category Archives: Tax – US

Tax Filing Becoming Even More Complicated

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Tax Filing Mor ComplicatedAn article in the New York Times featured a report from an Internal Revenue Service taxpayer advocate calling for a tax overhaul due to the “significant, even unconscionable, burden” placed on taxpayers just to file a tax return.

In her legally required annual report to Congress, the national taxpayer advocate, Nina E. Olson, estimated that individuals and businesses spend about 6.1 billion hours a year complying with tax-filing requirements. That adds up to the equivalent of more than three million full-time workers, or more than the number of jobs on the entire federal government’s payroll.

And filing is only becoming more complicated as lawmakers haggle over new tax breaks.

Since 2001, Congress has made nearly 5,000 changes to the United States tax code, or more than one a day on average. Nine in 10 taxpayers now pay money, for professional preparers or often-expensive commercial tax software, to figure out how much money they owe the government.

One of the advocate’s suggestions for streamlining the tax code was to repeal the alternative minimum tax, a parallel tax system intended to make sure rich Americans pay a fair amount in taxes, which is increasingly engulfing middle-class taxpayers. Another was to reduce the number of income exclusions, deductions and credits, known collectively as “tax expenditures,” that clutter up the tax code.

Read Full Article Here http://www.nytimes.com/2013/01/09/business/irss-taxpayer-advocate-calls-for-a-tax-code-overhaul.html

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More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

 

 

 

Impact on Depreciation with American Taxpayer Relief Act

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The American Taxpayer Relief Act of 2012 was finally passed by Congress and signed into law last week.  The business tax provisions contained in the bill are as follows:

  • 50% Bonus Depreciation has been extended through December 31, 2013
  • 50% Bonus Depreciation has been extended through December 31, 2014 for certain long production period and transportation assets
  • The 15 year recovery period has been extended from January 1, 2012 through December 31, 2013 for qualified:

Leasehold Improvement Property
Retail Improvement Property
Restaurant Property

  • Section 179 Expensing Election:

The maximum annual expense deduction for 2012 and 2013 has been increased to $500,000

The maximum annual investment limit for 2012 and 2013 has been increased to $2,000,000

For more information CCH has put together a Tax Briefing that covers the entirety of the American Taxpayer Relief Act of 2012 and is located at http://tax.cchgroup.com/downloads/files/pdfs/legislation/ATPR.pdf

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

2012 New Capitalization Rules: Part 4 – Improvements to Leased Property

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This is the last entry in our four part series covering tax law changes on depreciation for 2012. As we have indicated previously, these new regulations apply to any expenditure made on or after January 1, 2012. So far, we have covered Tangible Property, Materials & Supplies and the De Minimis Rule. Today’s topic is Improvements to Leased Property. Please note: we are only highlighting a few of the big issues. You can read the full list of updates to the U.S. Master Depreciation Guide 2012 from CCH

Updates to the U.S. Master Depreciation Guide 2012

 

Improvements to Leased Property

The new regulations state that a unit of property for a lessee consists of the leased part of the building and the structural components related to the leased portion. Additionally, if the lessee improves the leased portion then they must capitalize any expenditure.

The amounts that are not capitalized include any amounts received by the lessee for a construction allowance to make an improvement to the leased property that are excluded from income per IRS regulations. In addition, if the expenditure is considered in lieu of rent then any amounts spent by the lessee for an improvement to the leased property can not be capitalized.

These changes to dealing with materials and supplies can be confusing so refer to the CCH link above for complete details and examples. This concludes our series on the new capitalization rules.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

2012 New Capitalization Rules: Part 3 – De Minimis Rule

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Today we continue with part three of our review of tax law changes on depreciation for 2012. Remember, these new regulations apply to any expenditure made on or after January 1, 2012. So far, we have covered Tangible Property and Materials & Supplies and this time we will look at the De Minimis Rule.  Note: we are only highlighting a few of the big issues, but you can read the full list of updates to the U.S. Master Depreciation Guide 2012 from CCH

Updates to the U.S. Master Depreciation Guide 2012

De Minimis Rule

Starting in 2012, there are new rules to retain the de minimis provision that allows the expensing of certain qualifying property and materials and supplies. The new legislation sets limits as to the dollar amount that can be expensed under the De Minimis Rule. This rule can be applied by the taxpayer to property that is either produced or acquired.

These changes to dealing with materials and supplies can be confusing so refer to the CCH link above for complete details and examples. Check back for our next post which will cover new regulations on the improvements to leased property.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Can Brakes be Applied Before Going Off Fiscal Cliff in 2013?

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Zhang Jun/Xinhua/Zuma; Anton Reznikov/Shutterstock

With President Obama winning the election, Democrats adding to their majority in the Senate and Republicans retaining control of the House, we essentially have the same leaders and negotiators to the fiscal cliff and upcoming debt-ceiling crisis. But does that mean we should expect the same outcome?

President Obama looks to be agreeable to tax hikes on the top earners through other means such as reduced tax expenditures. He also indicated that he would gladly listen to ideas from Republicans. Speaker Boehner also hinted that he would agree to tax hikes of the rich on a static basis, while lowering tax rates.

As it becomes increasingly clear that the key to avoiding the “Fiscal Cliff” is a balanced approach of tax hikes and spending cuts, we are seeing both sides of the aisle dial back their pre-election rhetoric and strike a more conciliatory pose on this subject. On this area particularly Robert A. Green, CPA, wrote on the Forbes.com Great Speculations blog that he believes there is common ground:

“Both President Obama and Gov. Mitt Romney included a haircut on tax deductions for the rich in their tax plans, so there is common ground between the parties on this approach to tax reform. It was also advocated in Bowles Simpson and the Gang of Six in their deficit, spending and tax reform plans.

I think there is common ground here for striking a deal in the lame-duck session. Perhaps Speaker Boehner might accept President Obama’s idea of limiting itemized deductions to a tax rate of 28% (rather than 35%), thereby raising taxes on the upper income. It will probably take a bigger haircut for the math to add up.”

He also addresses the the potential stand-off in the Senate between Mitch McConnell and Harry Reid as well as the financial-market industry response.

Read the full article here:

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.